You Asked: The price flux at the pump
Q: How come our gas prices are so much higher than Powhatan, Dillwyn and so on? Powhatan is selling gas for $2.09 and Cumberland is $2.29. Can you help us out?
There are a variety of factors that can impact the difference in prices per gallon of gas you pay at the pump locally.
According to AAA Mid-Atlantic’s Tammy Arnette, competition, location, profitability and timing of fuel deliveries all come into play when store owners change the big numbers on their gas price signs.
“In Virginia, gas stations can change their prices at will, so if one station lowers their prices, the others may (or may not) follow suit,”
she said. “Gas prices can also change quickly, from morning to evening or from one hour to the next.”
Arnette said that if a gas station is in close proximity to others, “that may have a slight impact due to increased competition in the area.”
Stores that sell other items, such as snacks and sodas, may have more flexibility to use their profits on those items to help maintain lower gas prices, she said.
“A gas station’s current supply level and the price paid for gasoline now (in the ground) drives the price of gas at that particular station,” she said, citing timing of gas delivery.
“As we head into the fall and winter, gas prices could very well drop below $2 per gallon in areas of the Commonwealth due to lower driving demand and as stations switch to the more affordable winter blend of gasoline,” Arnette said.
“I really don’t have an explanation other than competitive pricing,” said Longwood Professor Dr. Bennie D. Waller of the regional difference in gas prices. Waller, who teaches finance and real estate, added, “That is, retailers many times will lower prices in order to stay competitive with nearby competitors.”
Jason Sanchez, the owner of Mitchell’s Market on Route 45, says he sets his gas prices slightly above what it costs him to get the gas. “Generally speaking, especially if it’s a Shell or Exxon, something that’s branded like that, the store owner usually doesn’t have a lot of control over that kind of thing,” he said of setting gas prices.
Unbranded stores, such as his, have more control, he said. “But the problem comes when you’re in a little store like me, is that price is tied to volume. And a little store like me doesn’t do the volume that a Sheetz or an Exxon does.”
He agreed that volume could be the reason gas prices are higher in rural areas. “The ruralness leads to low volume [which] ends up being the higher price,” he said.
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